Daily Market Outlook, April 1, 2020

<h2><span>Daily Market Outlook, April 1, 2020 </span></h2>
<p><b>The US market gave up intraday gains to end lower on Tuesday</b><span>, as market participants wrapped up a historic quarter sparked by the COVID-19 pandemic. Despite the weaker closing, the CBOE volatility Index (VIX) or “fear index” eased lower to 53.54 (from 57.08 previously). </span></p>
<p><b>Yields on US Treasuries fell</b><span>, but the exception was the 2-year UST yield which rose by 1.7bps to 0.246. The 10-year UST yield settled 5.7bps lower at 0.669% while the 30-year bond yield closed down by 1.3bps to 1.321%. The US dollar ended weaker against most of the major currencies although it continued to gain against the euro as the US Dollar index (DXY) ended down by 0.13% to 99.048 (from previous close of 99.181). </span></p>
<p><b>Risk assets were under further pressure overnight</b><span>. President Trump warned of a ‘painful’ two weeks ahead as coronavirus deaths rose in the US. </span></p>
<p><b>In terms of COVID-19, there have been further signs of stabilisation in the number of new cases in Italy</b><span>, suggesting that the lockdown implemented by the Italian government is starting to work. There were 4,053 new cases in Italy over the past 24 hours compared with 4,050 the previous day. COVID-19 cases continue to rise sharply in the US, although Dr Fauci, the US medical specialist, said “we’re starting to see glimmers … just the inklings” that the social distancing measures were limiting the rise in new cases. But he cautioned that “we’re not seeing (a turnaround) yet.”</span></p>
<p><b>Asian March manufacturing PMIs were mostly lower</b><span>, as was Japan’s Q1 Tankan (business sentiment) report. China’s Caixin manufacturing PMI, however, rebounded more than expected to 50.1 from 40.3 in February, echoing the rise in the ‘official’ PMI yesterday. Still, the Caixin report suggests that activity is only stabilising following the February plunge.</span></p>
<p><b>The US Federal Reserve, on Tuesday, announced a temporary repurchase agreement facility for foreign central banks to support the smooth functioning of financial markets</b><span>. The new facility will be made available on 6 April 2020 and is a new tool in the Fed’s arsenal to stabilize the dollar funding markets. In the new facility, the Fed offers repurchase agreements to foreign central banks with accounts at the New York Federal Reserve and the facility will allow foreign central banks to use their holdings of US treasury securities to obtain dollars for use in their jurisdictions. This will help dollar funding market functioning by broadening access to countries beyond the swap lines already established with some central banks. The transactions will be overnight but rolled over as necessary at an interest rate of 0.25%. </span></p>
<p><b>The most important US data on Wednesday is likely the ISM manufacturing survey for March</b><span> and, according to the Bloomberg survey, may fall to 45.0 (from 50.1 in February). Meanwhile, the US February construction spending is expected to rise by 0.6% m/m (from +1.8% in January). We will also be getting a glimpse of the US private jobs data from ADP and market expectations are for 150,000 job losses in March (from 183,000 jobs created in February.</span></p>
<p>&nbsp;</p>
<h3><b>Today’s Options Expiries</b><span> for 10AM New York Cut (notable size in bold)</span></h3>
<ul>
<li><span>EURUSD: </span><b>1.1000 (2BLN)</b><span>, 1.1005-10 (803M), </span><b>1.1050 (1BLN), 1.1070-80 (2.6BLN)</b><span> 1.1090-1.1100 (750M), 1.1170-80 (900M), 1.1190-1.1200 (600M)</span></li>
</ul>
<p>&nbsp;</p>
<ul>
<li>GBPUSD<b>: <span>1.2345 (316M), 1.2425 (615M)</span></b></li>
</ul>
<p>&nbsp;</p>
<ul>
<li><span>USDJPY: </span><span> </span><b>107.00 (1BLN), 107.50 (1.4BLN), 108.00 (2BLN)</b></li>
</ul>
<h3><span>Technical &amp; Trade Views</span></h3>
<p><b>EURUSD (Intraday bias: Bullish above 1.0950)</b></p>
<p><span>EURUSD From a technical and trading perspective, as 1.0950 attracts buyers bulls will be looking for confirmation of last week’s key reversal pattern, with the weekly candle printing a bullish engulfing pattern. A move through 1.1150 will likely inject further upside momentum opening a move to test offers and stops towards 1.13. A breach of 1.0950 would likely see a border corrective phase to test bids back towards 1.0850. Below 1.08 would suggest a false upside break and set focus back to year to date lows NO CHANGE IN VIEW</span></p>
<p><img class="aligncenter size-full wp-image-40970" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.35.png" alt="" width="2057" height="1224" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.35.png 2057w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.35-300×179.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.35-1024×609.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.35-768×457.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.35-1536×914.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.35-2048×1219.png 2048w" sizes="(max-width: 2057px) 100vw, 2057px" /></p>
<p><b>GBPUSD (Intraday bias: Bullish above 1.1950)</b></p>
<p><span>GBPUSD From a technical and trading perspective, as with EURUSD GBPUSD also printed a key reversal pattern last week as 1.20 now acts as support we can expect to see a test of offers and stop above 1.25. A move back through 1.22 would suggest a broader corrective phase to unwind near term overbought momentum, before another leg higher NO CHANGE IN VIEW</span></p>
<p><img class="aligncenter size-full wp-image-40971" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.53.png" alt="" width="2065" height="1223" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.53.png 2065w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.53-300×178.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.53-1024×606.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.53-768×455.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.53-1536×910.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.18.53-2048×1213.png 2048w" sizes="(max-width: 2065px) 100vw, 2065px" /></p>
<p><b>USDJPY (intraday bias: Bearish below 109.50)</b></p>
<p><span>USDJPY From a technical and trading perspective, another bearish weekly key reversal pattern. As 107 acts as support we will likely see a correction back to tests sellers resolve above 109. Bears will look to make a stand above here to force another leg lower targeting an equality objective towards 105. A move back through 110.85 would concern the bearish thesis and expose stops  above 111.85 UPDATE potential near term double bottom may delay downside objective with a whipsaw back to 110 before lower again. Through 107 would suggest downside targets are directly in play</span></p>
<p><img class="aligncenter size-full wp-image-40972" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.04.png" alt="" width="2069" height="1222" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.04.png 2069w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.04-300×177.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.04-1024×605.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.04-768×454.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.04-1536×907.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.04-2048×1210.png 2048w" sizes="(max-width: 2069px) 100vw, 2069px" /></p>
<p><b>AUDUSD (Intraday bias: Bullish above .5850)</b></p>
<p><span>AUDUSD From a technical and trading perspective, as buyers defend .5850 look for another corrective leg higher in a three push higher pattern to test the .6135 equality objective from here we should see sellers remerge. Another defence of .5900 would set a platform for a move higher to test .6400. However, a failure at .5900 will open a deeper decline to test .5650. NO CHANGE IN VIEW</span></p>
<p><img class="aligncenter size-full wp-image-40973" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.13.png" alt="" width="2054" height="1220" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.13.png 2054w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.13-300×178.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.13-1024×608.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.13-768×456.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.13-1536×912.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-01-08.19.13-2048×1216.png 2048w" sizes="(max-width: 2054px) 100vw, 2054px" /></p>
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